Friday, 16 November, 2018

2019–2022 fiscal plan approved

Govt to boost growth, employment, social justice

14 Apr 2018, 00:46 ( 7 Months ago)

DF Report
Leaders of the three-party alliance government announced government fiscal plan on Wednesday. Photo Finnish government by Lauri Heikkinen.

The general government fiscal plan has been approved in the government plenary session on Friday.

Earlier, the government on Wednesday agreed the General Government Fiscal Plan for 2019–2022 with the view to  promote growth by investing in education and skills.

Employment will be strengthened by facilitating the employment of unemployed young people, expanding conversion training and increasing the resources of the Employment and Economic Development (TE) Offices, said an official press release on Friday.

The Government will increase services and benefits to improve social justice.

Finland’s economy is growing quickly and growth is broad-based. Many of the economic policy objectives set by the Government are being fulfilled:

It appears that the 72% employment rate objective, considered ambitious, will be reached. In February, the trend employment rate was 71.1% (adjusted for seasonal and random variation).

The Government Programme target of 110,000 more people in employment is achievable. The number of people in employment has grown by 90,000 from the beginning of the parliamentary term.

​The total tax ratio began to fall in 2017.

The general government debt-to-GDP ratio already began to level off in 2016. The debt ratio will continue to fall in the next few years.

The budgetary targets set for local government and social security funds in the General Government Fiscal Plan will be met. The central government deficit will also decline.

Demand for public employment services has increased due to the activation model. The Centres for Economic Development, Transport and the Environment (ELY Centres) have estimated the additional personnel requirement to be a total of 206 person-years. In terms of employment appropriations, the estimated additional requirement for 2018 is a total of EUR 11.2 million. The Government has decided to implement in full the ELY Centres’ requests with respect to both employment appropriations and personnel resources.

Through Finland’s rapid economic growth, unemployment could be reduced even more quickly. At the same time, however, it is harder to find skilled labour. To solve the problem, the Government has already initiated various reforms related to educational levels. In addition, availability of labour will be promoted through growth services coming under the responsibility of the counties. These measures are aimed at securing skilled labour.

The Government has decided to initiate one-off, fast measures in 2018. These will aim to ensure sufficient supply of labour for businesses and to facilitate the availability of skilled labour, so that job seekers are matched with vacancies. The adopted measures relate to developing the skills of the labour force and particularly to the training needs of businesses in sectors where there are shortages of skilled workers and which are important for growth. The supplementary budget will allocate to the measures a total of EUR 54 million, of which EUR 30 million will go to training under the administrative branch of the Ministry of Education and Culture.

The Government will enhance and increase volume for business-oriented labour market training as well as growth service packages. EUR 24 million will be allocated to this. EUR 10 million will be allocated for conversion training of skilled workers in the ICT sector and other sectors where there are labour shortages. In vocational education, labour policy training will be increased and a pilot implemented in which a model of precise training for sector change will be created. EUR 16 million will be allocated for this. The goal is to develop the existing vocational education system so that it can respond more precisely to the needs of those changing sectors. Part-time and flexible training and teaching of literacy skills and the Finnish and Swedish languages will be increased with EUR 2 million in liberal adult education establishments. EUR 2 million will be allocated to improving the skills level of people with weak basic skills.

The Ministry of Education and Culture will launch a continuous learning reform (Skilful Finland), prepared in cooperation with the Ministry of Economic Affairs and Employment. The flexibility of the vocational education reform as well as employment and growth service training will be exploited and higher education establishments’ educational offerings and learning environments opened up for utilisation by both individuals and businesses. Completion of qualification segments and modules will be open and flexible. The emphasis on education not leading to a qualification will be increased in the financial steering of higher education establishments.

The need to reform legislation on study leave and adult education subsidies will be assessed to increase studying alongside work as well as further and continuing education.

A digital service package supporting continuous learning will be launched as a cooperative effort of the Ministry of Education and Culture, the National Board of Education and the Ministry of Economic Affairs and Employment. It will combine services that support continuous learning, skills mapping and recognition services, career planning and guidance services, and skills acquisition and development services. The project will be launched using current funding.

Boosting employment throughout Finland and ensuring the sustainability of general government finances also constitute a cornerstone of the Government’s work to reduce inequality and strengthen social justice. Finland is one of the most equal countries in the world. In Finland, inequality arises more from increasingly widespread affluence than from a broad increase in financial disadvantage.

Professor Juho Saari’s working group on inequality proposed a diverse range of means to prevent and reduce inequality. The working group cast light on the diversity of inequality.

The Government will invest in improving the position of over-indebted people at an annual level of EUR 9 million in 2019–2022. This will be allocated to financial and debt counselling, to counselling of debtors in connection with enforcement, and to accelerate court proceedings. Of this, EUR 1 million in 2019–2020 will also be allocated to mitigating the financial problems of people in rental accommodation. Financial and debt counselling resources will be increased with an additional appropriation of EUR 5 million, aimed at ensuring the regional availability of the service and developing cooperation preventing debt problems. Communication about financial and debt counselling services will be improved with additional resources. Counselling will be increased in enforcement with the aim of helping those encountering problems with their finances for the first time. At the same time, cooperation between financial and debt counselling and social work will be developed.

The Government is preparing a mental health programme, aimed at ensuring the availability of mental health services in the new health and social services system. The Government will reform self-determination, mental health and substance abuse legislation.

Investment grants for special groups will be increased by EUR 5 million per year. These will be directed at acquiring in the market apartments for subletting to homeless people able to live independently and replacing emergency shelters with apartments intended for people living on the street.

The Government considers it important that inequality is reduced by means of targeted measures through various income transfers. The focus must be on primary benefits to ensure that they are targeted at those who are in the most difficult life situations, such as sick people.

To reduce inequality and emphasise primary benefits, the Government will increase minimum daily allowances (sickness allowance, parental allowance, rehabilitation and special care allowance) to a level corresponding to labour market support. This will mean an increase of EUR 80.50 per month in minimum daily allowances.

The Government will allocate EUR 10 million to increasing the guaranteed pension of the lowest-income pensioners.  Among the recipients of the guaranteed pension are also young disability pensioners.

Government will allocate EUR 5 million to lowering the annual co-payment limit for medicines. The change will be prepared in collaboration with social partners.

The Government will initiate for the next government the preparation of a national child strategy. The objective is a cross-sectoral strategy based on extensively researched knowledge, strengthening the interests of the child in social decision-making. The child strategy will strengthen a child- and family-positive society as well as positive development of fertility in a forward looking way. Preparation will be guided by a broad-based child forum and the work of a strategy steering group. Preparation of the child strategy will be the responsibility of Minister of Family Affairs and Social Services Annika Saarikko and Minster of Education Sanni Grahn-Laasonen.

The basic security of the lowest-income families with small children will improve when parental allowances rise at the same time as minimum daily allowances are increased.

The Government with enhance the equality of family leave. The parents’ allowance period for adoptive parents will be extended to 233 working days from the date the child is taken into their care. The right to the parents’ allowance will be granted to all parents adopting a child under 18 years of age from outside the family. The adoption grant will be also be raised with an annual appropriation increase of EUR 0.3 million.

Mothers caring for a child alone will be granted the right to parental allowance days corresponding to the paternity allowance. In addition, mothers adopting a child alone and caring for a child alone will be granted the same right.

The paternity allowance period for the father of a multiple-birth family will be extended when two or more children come to the family at the same time. The total length of the paternity allowance period can be no more than 105 working days, equivalent to the maternity allowance days.

The changes will increase the costs of earnings security insurance. The legislative amendments will be prepared together with social partners by autumn 2018.

In addition, the Sickness Insurance Act will be amended so that discharging a municipal or county position of responsibility is not considered to be gainful employment that results in the payment of the minimum amount of parental allowance. The change will not apply to full-time or part-time positions of responsibility. The change will have no significant cost impact.

Equality in early childhood education will be supported with a new EUR 10 million appropriation for 2019. The money will be used to reduce group sizes and hire additional personnel in day-care centres operating in challenging areas. This form of funding, previously used in preschool and basic education, is a tool recommended by researchers for combating inequality and in which, for example, the education level and unemployment of an area have been used as criteria. The equality grants will be allocated to organisers of early childhood education. 

The experimental scheme on free early childhood education for 5-year-olds will be expanded and continued. The Government decided to allocate a new appropriation of EUR 5 million for this purpose. The aim of the extension of the free early childhood education experimental scheme is to bring more municipalities within the scheme and therefore raise the participation rate of 5-year-old children in early childhood education. An Early Childhood Education Act will be submitted to Parliament in spring 2018.

To promote educational equality, a learning materials allowance for upper secondary education students will be introduced. The allowance, intended to cover the costs arising from attending upper secondary education, will be directed at vocational education or general upper secondary education students under 20 years of age who are entitled to the low-income supplement to the study grant. The allowance will amount to approximately EUR 46 per month.

The Government decided on additional funding for general upper secondary education. The goal of the reform of general upper secondary education, to be submitted as a Government proposal, is to enhance the attractiveness of general upper secondary education as a general form of education, fostering eligibility for further studies in higher education and strengthening the quality of education and learning outcomes. Support and guidance of upper secondary education students will also be strengthened, and cooperation between higher education and working life as well as internationalisation increased. In total, EUR 4 million in 2021 and EUR 8.53 million from 2022 will be allocated for the costs arising from the reform.

Studying of the first foreign language, i.e. A1 language, will be brought forward to begin already in the spring of the first year of elementary school. The earlier language studies will apply to all first-grade pupils from 1 January 2020. The decree amendments required by the change will be issued in autumn 2018 and the curriculums in the National Board of Education during 2019. The weekly lessons per year to be used for the bringing forward of language studies (1 hour for first grade in the spring and 1 hour for second grade) will be added to the lesson hour quota. The total cost of the reform will be EUR 12 million from 2021.

The objective of the operational reform of the municipalities, the counties and the entire public sector is to strengthen general government finances by EUR 1 billion by 2029 (‘Public sector billion’). This is reflected in the General Government Fiscal Plan 2019−2022. The package consists of three parts:

Deregulation has taken place in all of the administrative branches throughout the parliamentary term. The purpose of deregulation is to make the everyday lives of citizens and business easier and to reform the authorities’ operating practices. The Government continued the deregulation work in the spending limits discussion. Some of the deregulation projects are already under way, and the Government confirmed their progress in the spending limits discussion. New measures were also initiated, for example barriers to work for asylum seekers will be removed, conditions for business activity improved, the original capital requirement (EUR 2,500) for limited companies eliminated, the implementation of the right to earnings-based unemployment security of non-owning family members of entrepreneurs improved, fund-raising for voluntary activities (change in the Lotteries Act) facilitated, all-year-round application to upper secondary schools allowed, restrictions on the resitting of matriculation examinations removed, and the introduction of a mobile driving licence explored.

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